Naira gains as dollar supply reaches four-month high of $450.39m

The Nigerian naira appreciated across foreign exchange (FX) markets on Thursday, following a significant rise in dollar supply to a four-month high of $450.39 million in the official market.

After Thursday’s trading session, the naira saw a 0.6 per cent increase, or N9.89, with the dollar being quoted at N1,659.26. This marked an improvement from Wednesday’s closing of N1,669.15 at the Nigerian Autonomous Foreign Exchange Market (NAFEM), according to data provided by the FMDQ Securities Exchange Limited.

Dollar supply from both willing buyers and sellers surged dramatically by 155.25 per cent, hitting $450.39 million on Thursday, compared to $176.45 million the previous day. This represents the highest supply level since May 24, 2024, when the market recorded a peak of $556.25 million, based on data compiled from FMDQ.

In the spot trading market, the dollar was quoted as high as N1,696 on Thursday, slightly higher than Wednesday’s low of N1,699. However, the intraday low stood at N1,601.48, showing a decrease from Wednesday’s high of N1,550.

The naira also strengthened in the parallel market, commonly referred to as the black market, where it gained 0.90 per cent, or N15, to close at N1,665 per dollar, compared to the previous day’s close of N1,680.

The surge in dollar supply and the naira’s appreciation in both the official and parallel markets bring optimism to the Nigerian foreign exchange market, which has been experiencing significant volatility in recent months. Experts anticipate that further increases in dollar liquidity could help stabilise the local currency, though long-term stability will require continued efforts by the Central Bank of Nigeria and market stakeholders.

The development, if sustainable, it’s a positive sign for importers and businesses that rely heavily on foreign exchange, as it offers some relief from the previously high dollar rates that had squeezed profit margins and raised costs.